BOS announces 29% increase in revenues and 252% - $116,000 - increase in net income for first quarter of 1997.

TERADYON, Israel--(BUSINESS WIRE)--May 14, 1997--BOS Better On-line Solutions Ltd. (NASDAQ:BOSCF) today reported a 29% increase in sales for the quarter ended March 31, 1997. Revenues increased to $2,015,000 from $1,568,000 during the same period in 1996.

Net income increased 252% in the first quarter to approximately $162,000 from $46,000 for the same period in 1996.

Gross profit increased 39% in the first quarter of 1997 to $1,586,000 from $1,140,000 during the same period in 1996 (79% of sales in the first quarter of 1997 as compared to 73% during the same period in 1996) due to increased sales of software-oriented products.

Research and development costs increased to approximately $412,000 during the first quarter of 1997 from approximately $220,000 during the same period in 1996, an increase of 87%. This increase was chiefly due to intensive recruitment of research and development personnel for Universal Client, the company's Client Solutions, Opposite Software, IPDS Printing Technology, and BOS' subsidiary, Lynk.

Selling, general and administrative expenses increased 26% to $1,065,000 in the first quarter of 1997 from $846,000 during the same period in 1996. This rise in expenses is attributed to the expansion of marketing operations in Europe and the U.S. and the advertising, marketing, and startup costs required to launch the new products developed by BOS and its Lynk and Opposite Software divisions.

"I am encouraged by BOS' increase in revenues, gross profit, and net income for this quarter," said BOS president Israel Gal, "especially since sales of MorphMaster, our on-the-fly GUI, as well as the most recent products currently being marketed by our subsidiary, Lynk, did not factor in this quarter's results. We are optimistic about the expected consumer response to our latest products now that they are being marketed, and we look ahead to the rest of 1997 with very positive expectations."

At the annual general meeting of BOS shareholders, it was decided to replace the company's independent public accountants Kesselman & Kesselman with the independent public accountants Somekh Chaikin (a member of the Price Waterhouse Worldwide Organization) for the fiscal year ending Dec. 31, 1997.

The forward-looking statements contained herein reflect management's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of them are beyond the control of the company, including, but not limited to, those risks and uncertainties detailed in the company's periodic reports and registration statements filed with the Securities and Exchange Commission. -0-

                         BOS CONSOLIDATED
                 B.O.S. Better Online Solutions Ltd.
                     (An Israeli Corporation)
                Condensed Consolidated Balance Sheets

                                March 31                December
                           1997          1996             1996
                        (unaudited)   (unaudited)       (audited)
                           U.S. $ in thousands

ASSETS
Current Assets
Cash and cash
 equivalents              4,853           442            5,422
Marketable securities       -             174              -
Accounts receivable:
  Trade                   2,373         1,399            2,106
  Other                     973           822              561
 Inventories              1,098           955            1,104
Total current assets      9,298         3,803            9,193

Fixed Assets
 Cost                     2,231         1,275            2,139
 Less - accumulated
  depreciation and
  amortization              661           419              623

Other assets and
 deferred charges           311           647              336
                         11,178         5,306           11,045

Liabilities and
Shareholders' Equity

Current Liabilities
Current maturities of
 long-term bank loans                     113
Accounts payable and
 accruals:
  Trade                     740           633              698
  Other                     899           810              994
Total current
 liabilities              1,639         1,556            1,692

Long-term bank loans,
 net of current maturities                167

Accrued severance pay       139           107              109

Total liabilities         1,778         1,830            1,801

Minority interest             9            26               15

Shareholders' Equity
Share capital - ordinary
 shares of NIS 1
 par value                2,382        2,173             2,382
Redeemable warrants         201          -                 201
Premium on shares         8,323          -               8,323
Capital surplus             166          166               166
Receipts on account
 of shares to be alloted     -            66                -
Retained earnings
 (accumulated deficit)   (1,681)       1,045            (1,843)
                          9,391        3,450             9,229
                         11,178        5,306            11,045
-0-

                           BOS CONSOLIDATED
                   B.O.S. Better Online Solutions Ltd.
                       (An Israeli Corporation)
           Condensed Consolidated Statements of Income (Loss)

                            3 Months Ended               Year Ended
                               March 31                   December
                         1997           1996               1996
                      (unaudited)     (unaudited)        (audited)
                          U.S. $ In Thousands
               (except per earning (loss) per share data)

Sales                   2,015          1,568               7,364

Cost of sales             429            428(a)            2,076

Gross profit            1,586          1,140               6,288

Research and Development
Costs:
 Expenses incurred       774            540(a)            2,202
 Less - Grants          (362)          (320)               (916)
 In process research
  and development
  acquired from Z-NAX
  Communication Ltd.      -              -                2,475
Net research and
 development costs       412            220               3,761

Selling, general
 and administrative
 expenses              1,065            846               4,555

Operating income
 (loss)                  109             74              (3,028)

Financial income
 (expense) - net          36            (31)                167

Income (loss) before
 taxes or income         144             43              (2,561)

Taxes on income           12              1                 (20)

Net income (loss)
 before minority
 interest                156             44              (2,881)

Minority interest in
 loss of subsidiary
 company                   6              2                  39

Net income (loss) for
 the period              162             46              (2,842)

Earnings (loss) per
 share                 $0.02          $0.01              $(0.41)

Weighted average
 number of shares
 outstanding -
 in thousands          7,380          5,439               6,870

CONTACT: Better On-Line Ltd.

Israel Gal, 972-4-999-0333